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Startups to Modi: Make it easier to do business

Prime Minister Narendra Modi’s visit to the Silicon Valley in the U.S. last year to interact with the entrepreneurs there has paid off as it has created several links between Indian and American entrepreneurs.

It is essential that the government’s role is focused towards making policies simplified for entrepreneurs and not getting involved in the functioning of these ventures. It must make sure that tax laws are amended for entrepreneurs and technocrats to own substantial percentage of the company.

A full-fledged start-up eco-system is possible only when the government introduces an array of benefits for start-ups including simpler compliance, easier access to investors, tax incentives for start-ups and tax credits for investors, zero capital gain tax and grants for research.

Start-ups could also benefit from relaxed FDI norms and easy listing norms, which in turn would encourage startups to be domiciled in India as opposed to other regulation-friendly countries such as Singapore. The government should introduce benefits that promise an eco-system with greater funding avenues in the form of tax exemptions for angels, easing working capital eligibility norms, deferral of tax on ESOP’s, which overall ensure that budding entrepreneurs have sufficient time to experiment to come out with the right business model.

India, which has the third-largest number of start-ups globally, will also support the ventures by removing the criteria of experience and turnover for bagging government procurement contracts.

The government launched an action plan on ‘Start-up India’, envisaging for itself the role of a “facilitator” for investments, promising to cut the maze of red tape that has hampered the country’s economic growth for decades and squeezed employment opportunities.